BNP Paribas Asset Management (BNPP AM) has announced plans to stop investing in companies that are engaged in mining thermal coal, to tackle the growing threat of climate change.
The company plans to implement an enhanced coal-exclusion policy in an effort to tackle climate change by divesting from coal, which is the single largest source of carbon emissions.
Set to come into force at the beginning of next year, the tighter exclusion policy will apply to all of the company’s actively managed open-ended funds.
BNPP AM said it will exclude companies that are deriving more than 10% of their revenue from mining thermal coal, or account for 1% or more of total global production.
BNPP AM Sustainability Research global head Mark Lewis said: “From an investment perspective the outlook for the coal industry looks increasingly uncertain as less carbon-intensive fuel sources, in particular renewables, become ever more competitive.”
The latest policy represents a major step towards BNPP AM’s 2025 target of aligning its portfolios with the targets set out in the 2016 Paris Agreement to limit the global temperature increase below 2°C above pre-industrial levels.
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BNPP AM noted that companies are required to reduce their dependence on coal mining so as to align their activities with the Paris Agreement.
Exceptions will be considered for those mining companies that propose to reduce their coal-based activities to levels that are consistent with the Paris Agreement.
Furthermore, demand for coal as a fuel for power generation is expected to decline, enabling investors like BNPP AM to divest from the resource without significant economic risk.
The credibility will be determined based on quantitative and qualitative criteria, including disposal plans for coal assets or acquisition plans for lower-carbon generation capacity.